Goodbye Mr Silva — A Brief History Of East London’s ‘Tech City’

0

It was December 2009 and I was headed to a Christmas party at Number 10 Downing Street. This wasn’t exactly a regular diary date for me. Two years in to working for TechCrunch out of London and it had proven harder than I’d thought to attract the attention of government people to the concerns of technology entrepreneurs and startups. This was despite kidnapping the Culture Secretary’s Twitter account. I guess Twitter wasn’t big enough a deal in 2009.

And this wasn’t exactly a tech big hitters event. Sarah Brown, the wife to then Prime Minister Gordon Brown, was throwing a party dubbed “Downing Tweet”, a sort of zeitgeist-driven event of the UK’s top Twitterers, many of them supporting Mrs Brown’s charitable efforts. I presumed I was there after being the first to break the news that she was even on Twitter, rather than to give my views about why the UK itself had yet to produce a similar such technology giant of the new wave of social media.

It was a great party, filled with interesting people. Later, any waifs and strays from the tech community de-camped to the famous Red Lion pub opposite. But, waking up with a mild hangover the next day, I wondered if perhaps we’d get any further than inviting prominent Twitterers to Number 10.

Back in 2009, despite some halting attempts to support the burgeoning UK tech startup scene, including a reception for “WebMission” entrepreneurs who had visited Silicon Valley (among them, stars that went on to become huge UK success stories like Huddle and Skimlinks), a party for Twitterers at some government office seemed to be as much recognition most tech startups could get at that time. Government only ever seemed to encounter technology companies when it issued vast public sector contracts, won usually by one of three companies.

The previous year the Labour government’s Culture Secretary (who’s Twitter account I had swiped) had set out to regulate Web site content and even strengthen Britain’s iron-fist libel laws online. Instead of encouraging startup innovation, we’d seen the usual lobby-driven legislation, like the Digital Economy Bill (also, as it happens,supported by the Conservatives) driven through by big record labels and old fashioned tech businesses.

There had been some promising signs – there was a big policy shift to open government data and faster broadband – but instead of laws to support tech startups, the then PM, Labour’s Gordon Brown, seemed to prefer a ‘top-down’ approach to tech policy.

In March of 2010, Prime Minister Brown announced the Institute of Web Science, which would be headed up by Tim Berners Lee, creator of the Web.

OK, I thought, this is something. But still the focus was handing down laws from above rather than engaging with the revolution that was happening on the ground – and little in the way of backing technology entrepreneurs.

By the time of the general election, it was too late for them to do so. The new Conservative / Lib Dem coalition won the election and Labour had missed their chance to co-opt the support of the booming tech sector.

With a brand new Coalition government between Conservative and Liberal democrats, and with the economy in dire straits, it seemed like government would not be focusing very heavily on the comparatively well-off tech sector to concentrate on saving the country from economic disaster.

But, just over three years later, and Britain’s technology and science sector scene has had a heck off a lot more recognition than a Twitter party.

And it’s largely down to the efforts of one man, Rohan Silva (pictured above).

The departure last week of the Prime Minister’s Senior Adviser on Policy was preceded by a party in the Rose Garden of Number 10 Downing Street and a final “Tech City” Breakfast (and it should be noted that the phrase “Tech City” had never been uttered until Silva came along, but more of that later).

But while there are no-doubt many such events at No.10 when a special adviser (or SpAd) leaves, this one was perhaps different to the average. After all, how many civil servants can attract Google’s Eric Schmidt (pictured below) to their leaving drinks?

Over the last three years, Silva was undoubtedly the prime architect of the UK government’s sea-change in attitude towards the tech startup entrepreneur community. His departure provides us with an opportunity to analyse where we are now, what’s been achieved and what is left to be done.

The story starts in 2008.

That Summer was fecund with new startup projects as the fruits of the older “Web 2.0″ movement started to ripen. Hunting down cheap offices, tech startups in London had gravitated towards the old industrial buildings of Shoreditch, alongside the many creative agencies and artists that had moved there in previous years. The area had been home to the first dotcom boom.

Dopplr relocates to a sublet at Moo Studios, 100 City Road, directly overlooking the roundabout. This is the famed and huge Transworld House, which is due to be re-developed, so the rent is cheap. There are regular rooftop barbecues at nearby Last FM and Moo on Friday evenings.

After many Retweets indicated the community’s approval, he and others set out to shout about East London tech startups to anyone who would listen, especially the media.

Two days later as the music pumped and the drink flowed, deep in the bowels of the Vibe Bar, at a Moo summer party thrown by influential founder Richard Morross, Biddulph tells an FT journalist of the idea and about a Google map he’ll make of all the startups in the area.

Long before this happened, in 2006, well before the Coalition took over, Rohan Silva was working as a policy analyst for the Treasury. One day George Osborne (then the Shadow Chancellor) took him out for coffee and asked him to join his team. “But I’m not an economist,” Silva protested. “That’s Ok, neither am I,” shot back Osborne.

It was fortuitous timing. That Silva had begun to realised the growing impact of the technology sector on the economy, and the facts had started to come in. According to Boston Consulting the internet economy’s contribution to UK GDP was approaching 8 per cent, higher than that of any other G20 nation. Silva was also interested in behavioural economics, where society could be coaxed in a certain direction rather than legislated into it.

Post election, in a pivotal moment, Silva went on a trip with Jeremy Hunt (then the brand new Secretary of State for Culture, Media and Sport) to Silicon Valley, and to Google’s HQ, the Googleplex. The trip was designed to land some major investment deals that the PM could announce a few weeks later. After a meeting with Eric Schmidt and Nikesh Arora, Google agreed to create the Google Campus in East London. A largely unsung hero of this moment was Anil Hansjee, then head of M&A at Google in London. It was Hansjee who kept pushing the idea internally until a 10 year lease on a building was finally secured (he later left to become an independent investor).

A year earlier I’d been campaigning for someone – anyone! – to start a co-working space in East London, as a side project to help startups and entrepreneurs get off the ground. It seemed to me there were too many events, but not enough serendipitous moments where tech people could simply wander into each other and create things, just as they did in Silicon Valley and San Francisco. We need a space to call our own.

Frustrated there’d been little movement on this, I started working on the idea with a friend, Elizabeth Varley, in 2009. It was eventually launched in the Summer of 2010 (TechHub, so that is my interest declared). In the process of banging on doors to attract interest and backing, we’d gone to see a few government people, but the conversations on 2009 went literally nowhere. We carried on, thinking tech was not a priority for that government, just as other governments had treated it. It would be up to the private sector to fix this.

By the Summer of 2010 TechHub had found a space literally on the Old Street Roundabout. At the same time entrepreneur Charles Armstrong had switched his Trampoline Systems office into a co-working space, The Trampery. And around the same time the London Hack Space had switched from meeting in the Ye Olde Cheshire Cheese pub to opening a hacker space in Cremer Street. Things were coming together.

That October of ’10 I was working out of TechHub, when a guy rang up.

“Can I come over and talk to you guys?” he said over a crackling line from New York. The next week, Tim Luke, seconded to become aid for Number 10 Downing Street, came in direct from his red-eye flight from Heathrow. Gulping down cups of coffee to stay awake, he grilled us and every startup founder he could find for about 4 hours. Then he disappeared.

What happened next took many of us in the tech scene pretty much by surprise. A number of people were invited to an East London venue (the Truman Brewery) on November 4th 2010.

The excitement was palpable as Prime Minister David Cameron took the stage to announce a welter of plans to recognise London’s growing technology startup community, as well as the East London tech cluster – but more importantly, board policy ideas like a new Startup Visa and a shopping list of new initiatives.

His speech – worked on extensively by Silva – effectively spoke the language of technology entrepreneurs. Startup founders were even invited to speak. Glenn Shoosmith from Booking Bug, who spoke about the need to open up government procurement to SMEs (something which later turned up in actually policy), and Steve Hardman from SocialGo, who spoke about the need to take action on early stage funding – which later helped inform the widely-praised EIS / SEIS tax changes.

It’s fair to say many in the tech startup community were blown away at this hail of initiatives. That, and the rather satisfying recognition that anyone had noticed there was something exciting going on in East London in tech.

Certainly it seemed like every event and networking maven in the tech startup scene had suddenly shifted East.

Of course, the Prime Minister turning up in “Silicon Roundabout” – as TechCrunch picked up on – had something of a positive and negative effect. On the one hand, it was going to blow the cover on what seemed – till then – like an exciting private party. But on the other, it sent the entire movement mainstream.

Ultimately this was “a good thing” – tech startup entrepreneurs were suddenly getting the recognition they deserved. After the doldrums of the Dotcom Bust, Tech was allowed to be cool again. And in an era where so many people – many of them young – were looking for jobs, here was a bunch of people actually making new, highly skilled jobs.

Although not obvious in the early days, it gradually became clear that Silva was behind this new approach. Supported by an able team including John Gibson, Jonathan Luff and Kieran Kumaria, Silva drove the agenda onwards (all four have since left for the private sector).

Only a day or so after the PM’s speech, at a hastily convened ‘breakfast’ (there was none, just coffee and tea) Silva presided over a meeting in the famous Cabinet Room of No 10 Downing Street consisting of some of the UK’s leading VCs, major technology companies and four representatives from the East London cluster. Shoesmith, Varley, Christian Ahlert (who runs Mini Bar, the London equivalent of the NY Tech Meetup), and myself.

It quickly became clear that Silva was deadly serious. The PM’s announcements weren’t to be a flash in the-pan-media event, with the agenda moving on elsewhere. They were really going to do this thing.

There would be no party and then a press release and then nothing. They were actually going to use this idea to make legislation.

Over the course of the next few weeks and months, the breakfasts kept going, and going. They got bigger. More stakeholders in Tech and in East London turned up. Bigger tech companies. Representatives from the financial institutions, the Square Mile. Pretty much all the movers and shakers were invited.

At almost every one, Silva was there, curating the conversation, and never ducking a subject when something controversial was asked – such as why startups still found it hard to get a fast install of broadband in the area. Silva, was often first in line to berate the poor representative from BT at those breakfasts.

This was not without controversy. To some critics it looked like the government was trying to take credit for the organic growth of “Silicon Roundabout” (itself a phrase conjured from the community) and wastefully spending money it didn’t have. The most vociferous of these was the journalist Milo Yiannopoulos. These critics criticised the £2m budget for the TCIO to be, effectively, a PR company for a cluster which contained no actual silicon or hardware, unlike the hugely successful Cambridge cluster which has seen the rise of the likes of ARM Holdings, the maker of the chips in the iPhone. The cluster had also only produced one sizeable exit, of Last.fm to CBS. Was it really sustainable to draw such attention to one cluster in such a way?

But what did happen was something which quite clearly piqued the interest of the media. The previously open secret – (at least amongst geeks) that some of the UK’s smartest, most visionary entrepreneurs were contained in this relatively small, grubby patch of London – was now out.

It turned out that the stories of Last.fm, where one founder had slept in a tent on the office roof to save money, which was later acquired by CBS; or the story of Dopplr, hanging out with TweetDeck and Moo.com in the old Transworld House building facing the Old Street Roundabout, were not just random flashes in the pan. The Roundabout already boasted the biggest developer meetup in London (in 2010 Mini Bar had 3,000 members now it has double that) and was sprouting co-working spaces and a myriad new companies. The game was on.

Emerging in the area, or later attracted in, were companies like 7digital, AMEE, Conversocial, Duedil, GroupSpaces, Huddle, Mendeley, Moshi Monsters, Mixcloud, Peer Index, Skimlinks and Songkick among others. At least five of them have since been tipped as future IPOs. Almost all were companies which had raised multiple venture rounds. Some companies, like Mendeley, were exiting for hundreds of millions. Songkick went on to create the biggest hiring event for technology startups London (and possibly the UK) has ever see: Silicon MilkRoundabout.

“Silicon Roundabout” was becoming a media sensation. So why, then, do the government start to insit on calling it “Tech City”? Where did the phrase “Tech City” come from?

When we first heard it, those of us in the tech scene tended to react with horror. “What was wrong with Silicon Roundabout” we thought?!

Let’s hear from Silva himself: “I felt that ‘Silicon Roundabout’ was a great nickname for the businesses around Old St, but that we needed an official name for the cluster as a whole that captured the global ambitions we had for the area (and which would also be easily understood overseas). Also, I believed that the cluster would grow over time far beyond the Old St Roundabout epicentre, and so it was important that the cluster had a title that moved beyond a narrow geographic area. After kicking around other suggestions with various tech folk (eg Silicon City, Silicon Shoreditch), I settled on Tech City.”

Whatever the case, it became clear that having an organisation – TCIO – beating the drum for tech startups in a cluster needed a name that people “got” in one go. Explaining that “Silicon Roundabout” had been coined by Dopplr CTO Matt Biddulph at a Moo party in 2008, had gotten retweeted a lot and had ended up on some T-shirts, would have been little complicated. The phrase said Tech and it said City. It didn’t need much more.

But the phrase had a three-way effect. It confused the heck out of locals, who suddenly thought these Tech City government types were there to either “help” them (shudder!) or bark orders at them.

In fact, Tech City and it’s tiny staff – aided by the long arms of UKTI and British Embassies abroad – simply started bringing people in. Lots of them. Delegations started arriving from just about everywhere, but especially the US. They’d turn up looking for gleaming towers of technology – instead they were presented with grungy Shoreditch back-streets and startup offices bathed in strip lighting. In a very British manner, Eric and his team ploughed on. Where Cambridge had showcased its ‘Silicon Fen’, the Tech City people presented fast-moving startups in SAAS, consumer mobile, enterprise and FinTech startups build by entrepreneurs and engineers who would sink flat whites during the day and pack the pubs and bars of Shoreditch by night.

Whether anyone liked the idea or not, with a ‘place’ called ‘Tech City’ to actually visit, the Prime Minister could steer the media’s search light onto the whole theme of technology entrepreneurship, turning up at co-working spaces and convening roundtables. It was becoming a case study in political signalling.

Did it help awaken the UK to the idea that technology, science and engineering could be sexy again, just as it was for the Victorians? When Isambard Kingdom Brunel was the pin-up of his day? It couldn’t have hurt. The Social Network movie of 2010 had arrived to help bolster the idea that anyone could join this movement. The UK was busy creating its own heroes of the scene.

THE TECH CITY TROJAN HORSE

The main downside was in thinking Tech City was almost separate to London itself. I had many startups CEOs complain to me that they were being discriminated against because they didn’t have an EC1 or EC2 postcode. And that’s absolutely right – why should they be treated this way? The point about recognising the area was that it was, and is, a big cluster in London itself – definitely the biggest cluster, but by no means the ONLY cluster.

But then again, there was clearly an external marketing advantage of zero-ing in one particular area. Whether Silva had planned it that way or not, the whole Tech City schtick was more like a Trojan Horse – a foot in the door to open a conversation.

And the name proved to be a broad enough phrase that could act not just as a showcase for the largest cluster of new-wave technology startups in London, but a sort of opener for the wider London and UK tech scene itself.

And under the pretext of “Tech City” entrepreneurs suddenly found themselves able to talk directly to the policy makers.

Silva set up the Tech City Advisory Group which included such high flying names as Michael Acton Smith (MindCandy), Eileen Burbidge (Passion Capital), Sherry Coutu (angel investor), Ian Hogarth/ Pete Smith (Songkick), Robin Klein (Index Ventures), Mike Lynch (Autonomy), Richard Moross (Moo), Joanna Shields (Facebook), Reshma Sohoni (Seedcamp), and a number of other heavy-hitters. You can imagine what ideas they fed into him – and it was to his credit that he listened.

And the move to bring startup entrepreneurs closer to the heart of government was not without significance in the context of Europe.

At the hastily convened “EG8 Summit” in Paris in the Summer of 2011 – a shindig thrown largely as part of President Sarkozy’s election campaign – Silva threw a party for UK entrepreneurs at the British Ambassadors residence.

A handful of sheepish Paris-based tech entrepreneurs turned up, complaining that their own government had, a week earlier, been frantically ringing around because they had no idea which French tech startups they could invite, or that “Silicon Sentier” was a street full of startups (it was, and is today, despite moves to house it elsewhere, as French governments are want to do).

Back in London, at the Number 10 Tech City Breakfasts curated by Silva, entrepreneurs conveyed the problems with broadband in the centre of London, the issues around Angel funding, the problems with hiring people outside the EU. You literally couldn’t shut them up.

Suddenly, tech entrepreneurs – like Greeks streaming from a wooden horse into Troy – were let into the heart of the UK government’s policy-making unit. It almost certainly lead directly or indirectly to changes in national policy, and Silva lost no time firing off policy initiatives. Indeed, he PM’s nick-name for him was ‘Big Bazooka’ – someone he could fire at a problem to fix it.

To a city used to having mere sales offices packed with advertising people, while the real coding was done elsewhere, this was big news.

That wasn’t all. There were new tax breaks for angel investment (EIS / SEIS), Entrepreneur Relief, a 10% CGT rate for employees who joined start-ups; moves to open London’s public markets to high growth tech companies (with the London Stock Exchange); the abolishing of stamp duty on the AIM market; the opening up Government ICT contracts to SMEs; creating the UK’s open data agenda; reform of the UK IP regime; and several other initiatives like the UK’s Life Science Strategy. Most of these were in fact driven by Silva.

In the year of the Olympics, the pace of this emphasis on tech didn’t let up, with the government throwing an innovation conference for visitors within walking distance of the much sought after Beach Volleyball courts. And the Tech City breakfasts kept coming.

Eventually, October 2012 rolled around and Van der Kleij left. For some weeks, the only voice there was Ben Southworth, an enthusiastic roustabout who’d run a lot of events in the area and had excellent connections with the developer community – but the organisation needed someone more high profile who could talk to big industry.

Silva clearly opened a voluminous contact book and wooed a big hitter to join the project: namely Facebook’s CEO in Europe, Joanna Shields.

Shields also had an excellent Silicon Valley pedigree. She had been CEO of Veon (which had sold to Philips), joined RealNetworks, and became, variously, Google’s Managing Director for EMEA, head of People Networks for AOL, and was later hired by Sheryl Sandberg to run Facebook in Europe. Admittedly this move to Tech City by Shields was after Facebook’s floatation, but still this was a huge coup. It meant Tech City area had what few other government initiatives in Europe had – a card-carrying entrepreneur and a seasoned technology executive with a Rolodex to kill for.

So when Rohan Silva gave his farewell speech on an overcast Summer’s day in the Rose Garden of Number 10 last week, it seemed as if – even for the harshest of critics – quite a few things had actually been achieved for the state of technology entrepreneurship in the UK.

THE DOWNSIDES

Not everything, of course, is fixed.

The critics of Silva, Tech City and the government’s initiatives say a number of issues remain. The Entrepreneur Visa for hiring people from outside the EU has been less useful when it comes practicalities, namely the US – though geo-politics around that issue goes beyond the tech sector.

On this point, Silva simply tells me: “Speak to the young Israeli entrepreneur I know who has been able to move to the UK via the Entrepreneur Visa, and you’ll see the difference it’s making.”

And a £50m government-backed fund to regenerate the Old Street roundabout appears drastically over-funded. The jury is out, but most agree the funds would be better spent, perhaps on a world-class conference venue that could attract major technology conferences and events (anyone in London will tell you the Excel centre is too far away and lacks any character).

Silva says: “The money is not to refurb the Roundabout. It’s to create a civic space for Tech City that will contain facilities that individual start-ups can’t afford themselves – including 3d printing labs, classrooms and auditoriums. Think of it as a Google Campus on steroids – it’s going to be just as catalytic as Campus for the growth of the Tech City economy and community.” Unfortunately this sounds too much like duplication. Both Google Campus and the many co-working spaces in the area may have something to say about that.

The Seed Enterprise Investment Scheme (SEIS) in particular has unleashed a wave of Angel investors, who’ve realised that SEIS almost completely de-risks their investment. Most have seen this as a positive move. However, a criticism of the scheme its low levels – its £150,000 cap could mean that many of the startups who qualify might end up being undercapitalised for the product they want to launch. Of course, this all depends on how the scheme is deployed by investors – but most investors I speak to favour it.

And the Left-leaning DEMOS think tank has criticised the Tech City initiative in a report saying startups were “frustrated” and some policies were counterproductive.

The fact that some younger startups are moving out because of higher rent could be a sign that Silva over-played his hand. The landlords in the area are certainly happy for all the attention. Although, with the UK economy now showing signs of recovery, cheaper offices just north of the wealthy Square Mile were always in danger of being eyed-up by bigger firms, financial and tech.

Silva calls this “a sign of higher demand for office space on Tech City as more companies want to move there, similar to the trend in San Francisco. We’ve done a huge amount to help startups get the space they need, from bringing Google Campus to East London, to supporting the growth of shared working spaces.”

Google Campus itself surveyed its own progress and found that it now housed over 100 startups, with one in four moving on to bigger premises.

And while the Cambridge cluster has it’s Fab labs and ARM, ‘Tech City’ still needs to prove it can break out of being a cluster focused often on apps, rather than global, game-changing platforms – although the like of Huddle, Moshi, Moo, Import.io and Songkick are clearly having a go.

Was it a good idea letting Amazon, Facebook and Google start engineering offices? Would they simply suck the talent out the startups on bigger salaries? In 2013, it seems too early to tell. At the very least we can hope some of that amazing talent will rub both ways, and hopefully towards startups.

And then there is the contentious numbers. Tech City says three years ago there was something like 100-200 Tech companies in east London. As of January 2013 they say there are 1,300 tech companies in East London in, with 92,000m2 of real estate acquired by technology, media and communications start-ups in London in the first nine months of last year. And, they say, there’s been a 39% increase last year in City office space rented to ‘tech and media’ start-ups.

The trouble is, the numbers look too high. Take this for instance. According to SFCiti.com, the body responsible for promoting San Francisco as a tech cluster (as if they needed to), says the city houses over 1,500 tech companies and the industry employs more than 30,000 people – and that was just in May 2012. It seems fanciful to suggest that London is already equal with San Francisco.

But London’s big cluster in the East is clearly not shrinking, and is now broadening out to other parts of the city nearby, such as WhiteChapel and Stepney.

The White Heat of the technology boom in the area has also added fuel to a project to re-vitalise the furthest reaches of the East End, with the Silvertown Project.

At the end of the day, one still comes across startups that want to move to the East – the desire to be able to be amongst ones’ peers – to bump into each-other, to kick around ideas – still remains extremely strong.

WHERE NEXT?

If there remain issues to hammer out, the tech community still has a foot in the door of No. 10. The Tech City breakfasts and the TCIO will carry on. Importantly, Chris Lockwood, formerly the US Editor of The Economist, will now take Silva’s place on Tech City and entrepreneurship policy. Daniel Korski, senior policy fellow at the Pan-European Council on Foreign Relations (ECFR), takes on Silva’s innovation policy work.

And what of Silva?

He’s clearly left government with plenty of fans. Pete Smith, co-founder of Songkick called him “a great advocate for UK tech entrepreneurs.” Eileen Burbidge, Passion Capital said his “grasp of the ways Government policy can improve the environment for startups has been second to none.”

Those new friends might prove useful: He’s moved on and this week began a new career – as a startup Entrepreneur-In-Residence, initially working out of Index Ventures‘ offices. He says he’s been “straining at the leash” to do a startup of his own, which will likely be in the field of online education.

Indeed, here’s a mischievous thought: Was “Tech City” simply Rohan Silva’s own Trojan Horse into his second career?

I put that to the man himself, but he laughs and says my theory is “definitely a conspiracy theory too far!”

He insists he created the Tech City agenda and associated policies around tech “because I passionately believe in enterprise and innovation – that’s also why I’ve taken the plunge to start my own business!”

Well, he’s about – as they say in the US — to “eat his own dog food”. If any of his policies weren’t up to par — he’s poised to find out for himself.